Tax on Eu pensions

Old Feb 20th 2016, 3:24 pm
  #1  
Just Joined
Thread Starter
 
Joined: Feb 2016
Posts: 15
Siskin is an unknown quantity at this point
Default Tax on Eu pensions

Hello all
Just joined the forum.
We are considering moving back to the uk after living in Luxembourg since 1974.
I have a Luxembourg state pension which is taxed at source in Luxembourg.
My question is does anybody know what level of tax would have to be paid in the uk.I know there is a double tax agreement with Lux but trying to find out how much would be deducted is a nightmare.
Have read the tax information on the uk website and tried asking the question face to face at a tax office in the uk. And am still none the wiser.
Has anyone returned to the uk with a Eu pension and can advise what sort of tax is paid.
I don't want to move back and find that I cannot afford to live.

Hope someone can help with this

Thanks and best regards.
Siskin.
Siskin is offline  
Old Feb 20th 2016, 5:37 pm
  #2  
Was in Canada, now home.
 
Editha's Avatar
 
Joined: Aug 2011
Location: Devon
Posts: 3,388
Editha has a reputation beyond reputeEditha has a reputation beyond reputeEditha has a reputation beyond reputeEditha has a reputation beyond reputeEditha has a reputation beyond reputeEditha has a reputation beyond reputeEditha has a reputation beyond reputeEditha has a reputation beyond reputeEditha has a reputation beyond reputeEditha has a reputation beyond reputeEditha has a reputation beyond repute
Default Re: Tax on Eu pensions

I've skimmed the UK/Luxembourg tax convention, which seems to follow the normal pattern -- that once you are resident in the UK, your income will be taxed in the UK, even if its source is from Luxembourg.

That said, the normal rates of income tax will apply. You'll find them on this link. You should be able to work out roughly what tax you will pay from the information provided.

Last edited by Editha; Feb 20th 2016 at 5:38 pm. Reason: typo
Editha is offline  
Old Feb 20th 2016, 7:50 pm
  #3  
nun
BE Forum Addict
 
nun's Avatar
 
Joined: Aug 2004
Posts: 4,752
nun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond repute
Default Re: Tax on Eu pensions

Article 17.2 of the UK/Lux DTA says that social security payments can be taxed by the country making them. So Lux tax would be payable. There's nothing to say that the UK can't also tax the SS payments when made to a UK resident. So the next question becomes in which country do you apply the foreign tax credit?
nun is offline  
Old Feb 20th 2016, 9:52 pm
  #4  
Was in Canada, now home.
 
Editha's Avatar
 
Joined: Aug 2011
Location: Devon
Posts: 3,388
Editha has a reputation beyond reputeEditha has a reputation beyond reputeEditha has a reputation beyond reputeEditha has a reputation beyond reputeEditha has a reputation beyond reputeEditha has a reputation beyond reputeEditha has a reputation beyond reputeEditha has a reputation beyond reputeEditha has a reputation beyond reputeEditha has a reputation beyond reputeEditha has a reputation beyond repute
Default Re: Tax on Eu pensions

Originally Posted by nun View Post
Article 17.2 of the UK/Lux DTA says that social security payments can be taxed by the country making them. So Lux tax would be payable. There's nothing to say that the UK can't also tax the SS payments when made to a UK resident. So the next question becomes in which country do you apply the foreign tax credit?
Article 17 of the DTA I'm looking at refers to earnings of public entertainers, not social security. It's article 18. If taxed in Luxembourg, then not in the UK.
Editha is offline  
Old Feb 21st 2016, 4:46 am
  #5  
nun
BE Forum Addict
 
nun's Avatar
 
Joined: Aug 2004
Posts: 4,752
nun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond repute
Default Re: Tax on Eu pensions

Originally Posted by Editha View Post
Article 17 of the DTA I'm looking at refers to earnings of public entertainers, not social security. It's article 18. If taxed in Luxembourg, then not in the UK.
Yes you are right, it's Article 18.2. I was reading it on my phone and my eyesight is so bad that I only saw II and not III.
nun is offline  
Old Feb 21st 2016, 1:12 pm
  #6  
BE Forum Addict
 
Joined: Apr 2011
Location: The Shire
Posts: 1,114
theOAP has a reputation beyond reputetheOAP has a reputation beyond reputetheOAP has a reputation beyond reputetheOAP has a reputation beyond reputetheOAP has a reputation beyond reputetheOAP has a reputation beyond reputetheOAP has a reputation beyond reputetheOAP has a reputation beyond reputetheOAP has a reputation beyond reputetheOAP has a reputation beyond reputetheOAP has a reputation beyond repute
Default Re: Tax on Eu pensions

DT 12318 - Luxembourg on the HMRC site is less than convincing. "Article 18 was substituted by SI84/364 as below;"

It states the "social security legislation of a Contracting State may be taxed in that State." [under (2)]

DT: Luxembourg: double taxation agreement, Article 18: Pensions

(IF the pension were to be taxed in the UK, it would only be taxed on 90% of the amount.)
theOAP is offline  
Old Feb 23rd 2016, 6:40 am
  #7  
Happy To Help!
 
TopNik's Avatar
 
Joined: Nov 2012
Location: Everywhere
Posts: 158
TopNik is a jewel in the roughTopNik is a jewel in the roughTopNik is a jewel in the roughTopNik is a jewel in the rough
Default Re: Tax on Eu pensions

Hello Siskin,

Once you become UK resident you will need to register for self assessment with HMRC and file an annual tax return to report your foreign income from your pension in Luxembourg.

There is a double taxation agreement (DTA) between the UK and Luxembourg so foreign tax credit relief (FTCR) would be applied, the calculation of which would take place when completing your tax return.
TopNik is offline  
Old Feb 23rd 2016, 3:12 pm
  #8  
nun
BE Forum Addict
 
nun's Avatar
 
Joined: Aug 2004
Posts: 4,752
nun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond repute
Default Re: Tax on Eu pensions

Originally Posted by theOAP View Post
DT 12318 - Luxembourg on the HMRC site is less than convincing. "Article 18 was substituted by SI84/364 as below;"

It states the "social security legislation of a Contracting State may be taxed in that State." [under (2)]

DT: Luxembourg: double taxation agreement, Article 18: Pensions

(IF the pension were to be taxed in the UK, it would only be taxed on 90% of the amount.)
So Luxembourg has the right to tax the SS it pays.....but we aren't exactly sure that they will. The usual things come to mind ie. if SS is the only Lux income will it be below the taxable threshold, if so there are no Lux tax issues. Is there any automatic withholding that needs to be claimed back etc.
nun is offline  
Old Feb 25th 2016, 12:09 am
  #9  
Just Joined
Thread Starter
 
Joined: Feb 2016
Posts: 15
Siskin is an unknown quantity at this point
Default

Thanks for the replies.
Tax on pensions in lux is paid wherever you live in the world.The pension is not below the taxable threshold.
It just comes down to how much extra would need to be paid in the uk and any other extra payments needed.
Regards siskin

The pension I get from Luxembourg is taxed in Luxembourg wherever it is paid.
Has anyone returned from France or Spain with a French or Spanish pension and how much extra is paid in uk.
Does anyone know if it is possible to do a simulation on a foreign pension without filling in a tax assessment.
Can't find anything definite on the hmrc websites.Would they be able to advise on this if I visited a hmrc office in the uk.
Thanks again for the help
Regards siskin

Last edited by BEVS; Feb 29th 2016 at 5:38 am.
Siskin is offline  

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Contact Us - Archive - Advertising - Cookie Policy - Privacy Statement - Terms of Service - Do Not Sell My Personal Information -

Copyright © 2021 MH Sub I, LLC dba Internet Brands. All rights reserved. Use of this site indicates your consent to the Terms of Use.